New Mali mining law could boost state, local interest in projects to 35%

Hummingbird Resources

14/07/2023 12:17

* 
      Mali eyes higher share of mining revenue in review
    

        * 
      Barrick, B2Gold among miners in talks with Mali
    

        * 
      Government aims to get 10%, option for 20% more
    

  
    By Felix  Njini, David Lewis
       NAIROBI, July 14 (Reuters) - Mali's military-led
government is in talks with gold miners over proposed changes to
its mining law that could see it boost state and private Malian
interests in new projects to 35%, from up to 20% today,
according to a draft of the new code seen by Reuters.
The government announced the review of the mining code in
January after it said an internal audit had shown that Mali, one
of Africa's biggest gold producers, was not receiving a fair
share of profits while granting too many tax breaks.
    The draft, dated June 17 and verified by three sources close
to the talks, shows the government aims to take a direct 10%
stake in mining projects once a permit has been issued,
entitling it to 10% of dividend payments.
    It would give the state the option to buy an additional 20%
within the first two years of commercial production, possibly
through a newly created state mining entity.
    International investors would have to cede a 5% stake to
locals, the document said.
    Mali's current mining law, passed in 2019, gives the state
the right to 10% with the possibility of acquiring a further 10%
stake.
    A separate bill within the law would ensure miners employ
more locals to top positions, transfer skills and technology,
and place a cap on expatriate salary costs, the sources said.
    A spokesman for Mali's mines ministry declined to comment on
the draft, saying no law has been proposed so far to the
country's transitional parliament.
    Barrick Gold  ABX.TO , the world's No. 2 gold miner, and
Canadian rival B2Gold  BTO.TO  are among the biggest producers
and have been expanding output in Mali, even amid frequent
changes in government and rising insecurity.
    The two are among a number of miners taking part in talks
with the government, which is keen to claw more revenue from a
sector that has remained attractive despite coups and a deadly
Islamist insurgency.
            
    REGULATORY UNCERTAINTY
    Barrick is "confident that through constructive dialogue"
Mali would be able to maintain its attractiveness as an
investment destination, the Toronto-based miner, which has
operated in Mali for over two decades, said.
    "As in any generation-long relationship, there have been
occasional differences of opinion between the partners, but
these have always been resolved through constructive dialogue,"
a spokesperson said, adding that it was engaging with the
government on the code "in the same spirit."
    The government already holds a 20% shareholding in mining
projects such as Barrick's Loulo-Gounkoto and B2Gold's Fekola.
Both mines are among the biggest on the continent and this year
Loulo-Gounkoto is forecast to produce about 560,000 ounces of
gold while Fekola is aiming for about 610,000 ounces.
    Resolute Mining  RSG.AX  and Hummingbird Resources HUMR.L 
also operate in Mali.
    The proposed changes represent a source of regulatory
uncertainty for a sector that has been relatively shielded from
the turbulent political and security landscape in recent years,
said Mucahid Durmaz, senior West Africa analyst at Verisk
Maplecroft.
    "As the junta needs to boost state revenues, the change will
likely encourage more state interventions such as demands for
re-negotiating mining contracts, introducing additional taxes,
and temporary suspensions of mining projects," Durmaz said.
    Discussions with the government over the new rules are
"encouraging and healthy" and are expected to continue over the
coming months, B2Gold CEO Clive Johnson said.
    Johnson said he had not seen the draft document and declined
to comment on government demands, saying discussions are still
in early stages.
    "There is a lot of discussions going on which is very
healthy and we are confident we can find common ground going
forward," he said.

(Reporting by Felix  Njini and David Lewis, additional reporting
by Tiemoko Diallo in Bamako; Editing by Bate Felix and Conor
Humphries)
((mailto:Felix.Njini@thomsonreuters.com;))